By Steve Goldstein, MarketWatch
Jan. 3, 2006
U.S. stock market futures were pointing to a strong start in 2006, with
views on the interest-rate cycle right back at the forefront ahead of the
release of Federal Open Market Committee minutes.
The health-care sector also is likely to draw attention on Tuesday after
an upgrade of Johnson & Johnson and another biotech pact inked by Wyeth.
S&P 500 futures climbed 5.00 points at 1,259.80 and Nasdaq 100 futures
rose 6.0 points at 1,665.0. Dow industrials futures climbed 51 points to
10,795.
Overseas markets also were bullish, with gains in Europe and Asia markets,
though volumes were still on the light side. Tokyo was still shut for a
holiday.
U.S. stocks had finished 2005 on a bearish note on Friday, with the Dow
industrials suffering its first yearly loss since 2002.
The dollar was noticeably lower against the euro and the yen ahead of the
FOMC release, as well as an expected decline in the ISM December
manufacturing survey. One euro recently was worth $1.1872, up 0.5%, while
a dollar traded down 0.2% vs. the yen at 117.21.
Markets will be looking to see whether the Fed, in addition to dropping
the word "accommodative" to describe its interest-rate policy, offered up
any more clues on how much longer it will ratchet up rates.
Front-month crude oil futures tacked on 41 cents to $61.45 a barrel, while
natural gas shed 44.3 cents to $10.782 per million British thermal units.
While a weekend crisis between Russia and the Ukraine over natural gas
deliveries looks to have abated, the news highlights the fragility of
energy supplies, some said.
"It does highlight the innate tightness of energy supplies, not only in
the U.S. and China but Europe too, and the general dependence on remote
and politically uncertain sources of supply," said Roger Richards, an
analyst at Dryden Wealth Management.
Of companies in focus, Google rallied $7.44, or 1.8%, to $422.30 in
Instinet pre-open trading after Piper Jaffray raised its price target to
$600 from $445.
"Given the company's performance, market share gain and the pipeline of
new products, we believe outperformance is still very likely," said
Analyst Safa Rashtchy.
Dow component Wal-Mart Stores fell 52 cents, or 1.1%, at $46.28 in
Instinet pre-open trading after the world's largest retailer reported
same-store sales in December at the low end of forecast, at 2.2%.
Also in the Dow, Johnson & Johnson was upgraded to overweight from neutral
by J.P. Morgan, with the broker expecting 2006 guidance to be a positive
catalyst for the stock. Up to seven drugs may be approved or awaiting
approval in 2006 to 2007, the broker added. The stock was not active in the
pre-open.
The same broker upgraded Baxter International to overweight from neutral.
Baxter separately agreed to license Innovata's Adept adhesion reduction
biomaterial for an undisclosed sum.
Among other Dow stocks that were seeing activity, Microsoft edged up 5
cents to $26.20, Intel added 19 cents to $25.15, General Motors gave up 19
cents to $19.23 and Pfizer edged up 24 cents to $23.56.
Wyeth has agreed to develop and market anti-body like drugs from privately
held Trubion Pharmaceuticals in a deal worth up to $800 million, The Wall
Street Journal reported, citing a Wyeth executive. Wyeth, which signed two
biotech pacts in December, will pay $40 million upfront with milestones
potentially reaching $800 million, the report said. Wyeth also
agreed to take a stake in Trubion if the company goes public, the report
said.
Rambus ran up 12% to $18.16 after it announced a 5-year patent license
deal with semiconductor maker Advanced Micro Devices. AMD shares gained 49
cents to $31.09.
Liberty Media unit Starz Entertainment will introduce a service - Vongo --
to let people download movies from the Internet for $9.99 a month.
Affiliated Computer Services is reportedly close to selling itself to a
consortium of private equity investors for $8 billion in a deal that may
close by the end of the week, The New York Times reported. The group is
prepared to pay up to $65 a share, the report said.
Shares of CBS Corp. will start trading after its spinoff from former
parent Viacom Inc. Prudential started coverage at overweight with a $30
price target, citing compelling valuation.
This is Thomson Financial's Market Commentary, which is issued three times
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p.m.). The information herein is believed to be true and accurate. We
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SOURCE Thomson Financial Corporate Group
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